Here is a scenario of someone who has good credit compared to someone with fair credit. The loan amount is $20,000 and we’ll finance it for 5 years. We’ll say the car is between 1 and 3 years old.
The monthly payment for the person with excellent credit will pay $354 a month. Compare that to the person with fair credit. That person will pay $443 a month. Check out the difference in the interest rate.
Did you notice how much the person excellent credit will pay the bank for taking a risk on them? They are paying $1,291 in interest to the bank over the 5 year loan. Check out how much the person with fair credit will be paying in interest over 5 years! It’s $6,626. That’s substantial!
There are many different ways to build excellent credit, but the way I like to recommend (probably because I worked at a bank in lending) is to open a credit card with a $500 credit limit.
Then put one purchase on the credit card each month. One example is a gallon of milk. Yes, just ONE purchase.
When you get the statement, you pay it in full and on time each month.
You have to use credit to build credit!
This is how you build credit.
Learn More!
I hope you found this information helpful!
Any recommendations I make should be taken into consideration with your values and goals. You should make the best decision that aligns with your family’s values.
As a Financial Coach, my mission is to help families save more, spend less so they can buy and do the things most important to them and spend their time and energy focusing on their kids.
Spending quality time with your kids is more important than stressing about finances. Instead of going to friends and family and sharing your financial struggles, reach out to me. I love talking about money, values, assessments and strategies to make positive changes to your financial habits to live a life you love.
I understand because I’ve been through some really challenging financial situations. Learn more about me.
I’m a kind, heart-centered coach who is excited to help you! If you’re struggling with your finances, get the results you want – I promise to keep you accountable and help you manage your finances successfully . I have a 100% guaranteed or your money back for the 1st session!
Finally, I wish you success in your financial journey😊
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